The Australian Retailers Association has accused landlords of “turning the screws” on retailers despite the economic downturn.
An ARA survey has found 31% of retailers were hit with rental increases to 10% or more when the came to renew their leases in the last six months. ARA executive director Richard Evans claims some of his members have reported being slugged with increases of more than 25%, despite dramatic falls in consumer spending.
The survey showed 85% of retailers are paying rents totalling more than 10% of turnover, while 40% are paying occupancy costs equivalent to 15% of turnover.
“[That] is never sustainable for a small business, but is particularly crippling during a time of economic downturn,” Evans says.
He is angry that the Rudd Government has to take action on a review of retail tenancies conducted by the Productivity Commission in August last year.
Evans wants the Government to bring retailers and landlords together for a “retail tenancy crisis roundtable” to address the state of the tenancy market.
Evans wants the Government to separate legislation for major shopping centres and suburban high street retail outlets, and apply a code of conduct to major shopping centre landlords, to be regulated by the ACCC.
“The major issues for retail leasing fall into regional and sub-regional shopping centres. We say, seperate them,” Evans said.
He is also wants an end to the practise whereby tenants in shopping centres are required to report turnover to landlords. “The landlords say it to see how the tenant is tracking and to monitor foot traffic No its not, it’s to do with how much they can gouge out of the tenant.” Evans wants a system whereby tenants report to an independent third party.
He also wants to see the introduction of gross leases (where rent is payable inclusive of all charges) and a national centre where all commercial lease terms are recorded, including inducements.
“Retailers suffering from the effects of low consumer confidence have been hurting for over 12 months and the Government must help alleviate spiralling occupancy costs adding further pressure to retailers who are already struggling,” Evans says.
Related stories:
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
